Exhibit 2.20
STOCK PURCHASE AGREEMENT
AMONG
CUMULUS HOLDINGS, INC.
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
December 17, 1997
TABLE OF CONTENTS
Page
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1. Purchase and Sale of Target Shares.........................................1
(a) Basic Transaction...................................................1
(b) Purchase Price......................................................1
(c) The Closing.........................................................2
(d) Deliveries at the Closing...........................................2
(e) Noncompetition Agreement............................................2
(f) Local Marketing Agreement...........................................2
2. Representations and Warranties of the Sellers..............................2
(a) Authorization of Transaction........................................2
(c) Noncontravention....................................................2
(d) Brokers' Fees.......................................................3
(e) Company Shares......................................................3
3. Representations and Warranties of the Buyer................................3
(a) Organization of the Buyer...........................................3
(b) Authorization of Transaction........................................3
(c) Noncontravention....................................................3
(d) Brokers' Fees.......................................................4
4. Representations and Warranties Concerning the Company......................4
(a) Organization, Qualification, and Corporate Power....................4
(b) Capitalization......................................................4
(c) Noncontravention....................................................5
(d) Financial Statements................................................5
(e) Subsequent Events...................................................5
(f) Undisclosed Liabilities.............................................7
(g) Tax Matters.........................................................8
(h) Tangible Assets.....................................................9
(i) Owned Real Property.................................................9
(j) Real Property Leases...............................................10
(k) Intellectual Property..............................................11
(l) Contracts..........................................................11
(m) FCC Licenses and Compliance with FCC Requirements..................12
(n) Insurance..........................................................13
(o) Litigation.........................................................13
(p) Employees..........................................................13
(q) Notes and Accounts Receivable......................................13
(r) Powers of Attorney.................................................13
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(s) Employee Benefits..................................................13
(t) Environment, Health, and Safety....................................15
(u) Legal Compliance...................................................16
(v) Certain Business Relationships With the
Company and Its Subsidiaries......................................16
(w) Brokers' Fees......................................................16
(x) Advertising Contracts..............................................16
(y) Disclosure.........................................................17
5. Pre-Closing Covenants.....................................................17
(a) General............................................................17
(b) Transfer Applications..............................................17
(c) Notices and Consents...............................................17
(d) Operation of Business..............................................18
(e) Employees..........................................................18
(f) Advertising Obligations............................................18
(g) Operating Statements...............................................18
(h) Contracts..........................................................18
(i) Operation of Stations..............................................18
(j) Credit and Receivables.............................................18
(k) Preservation of Business...........................................18
(l) Full Access and Consultation.......................................18
(m) Notice of Developments.............................................18
(n) Exclusivity........................................................19
(o) Title Insurance....................................................19
(p) Surveys............................................................20
(q) Environmental Assessments..........................................20
(r) Control of Stations................................................20
(s) Risk of Loss.......................................................20
6. Conditions to Obligation to Close.........................................21
(a) Conditions to Obligation of the Buyer..............................22
(b) Conditions to Obligation of the Sellers............................22
7. Post-Closing Covenants....................................................23
(a) General............................................................23
(b) Verification of Working Capital....................................23
(c) Litigation Support.................................................24
(d) Transition.........................................................24
(e) Confidentiality....................................................24
(F) Retainage Adjustment...............................................24
8. Remedies for Breaches of this Agreement...................................24
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(a) Survival...........................................................24
(b) Indemnification Provisions for the Benefit of the Buyer ...........25
(c) Indemnification Provisions for the Benefit of the Sellers .........25
(d) Matters Involving Third Parties....................................25
(e) Specific Performance...............................................26
(f) Liquidated Damages.................................................26
(g) Other Indemnification Provisions...................................26
9. Definitions...............................................................26
10. Termination...............................................................31
(a) Termination of Agreement...........................................31
(b) Effect of Termination..............................................31
11. Miscellaneous.............................................................31
(a) Survival...........................................................31
(b) Press Releases and Announcements...................................31
(c) No Third Party Beneficiaries.......................................32
(d) Section 338 Election...............................................32
(e) Entire Agreement...................................................32
(f) Succession and Assignment..........................................32
(g) Counterparts.......................................................32
(h) Headings...........................................................32
(i) Notices............................................................32
(i) Governing Law......................................................34
(j) Amendments and Waivers.............................................34
(k) Severability.......................................................34
(l) Expenses...........................................................34
(m) Construction.......................................................34
(n) Incorporation of Exhibits and Schedules............................34
(o) The Sellers........................................................35
(p) Submission to Jurisdiction.........................................35
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EXHIBITS
Exhibit A--Form of ▇▇▇▇▇▇▇ Money Escrow Agreement
Exhibit A-1--Form of Letter of Credit
Exhibit B--Form of Noncompetition Agreement
Exhibit C--Form of Retainage Agreement
Exhibit D--Form of Opinion of Counsel to the Seller
SCHEDULES
Description Section Reference
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Company Shares 2(e)
Directors and Officers 4(a)
Financial Statements 4(d)
Subsequent Events 4(e)
Tax Matters 4(g)
Tangible Assets 4(h)
Owned Real Property 4(i)
Real Property Leases 4(j)
Intellectual Property 4(k)
Contracts 4(l)
FCC Licenses 4(m)
Insurance 4(n)
Litigation 4(o)
Employees 4(p)
Employee Benefits 4(s)
Business Relationships 4(v)
Advertising Contracts 4(z)
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STOCK PURCHASE AGREEMENT
This Agreement ("Agreement") entered into as of December 17, 1997,
by and among Cumulus Holdings, Inc., an Illinois corporation (the "Buyer"); and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a citizen of Texas; ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a citizen of Texas;
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a citizen of Arizona; ▇▇▇▇ ▇▇▇▇▇, a citizen of Arizona; ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, a citizen of Arizona; ▇▇▇▇▇ ▇▇▇▇▇▇▇, a citizen of Arizona; ▇▇▇▇▇
▇▇▇▇▇▇▇, a citizen of Arizona; and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a citizen of Arizona
(collectively the "Sellers"). The Buyer and the Sellers are referred to
collectively herein as the "Parties."
The Sellers in the aggregate own all of the outstanding capital
stock of New Frontier Communications, Inc., an Arizona corporation (the
"Company") which, in turn, owns and operates radio stations KBAT-FM (licensed to
Midland, Texas); KMND-AM (licensed to Midland, Texas); KODM-FM (licensed to
Odessa, Texas); KNFM-FM (licensed to Midland, Texas); and KGEE-FM (licensed to
Monahans, Texas) (collectively the "Stations").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, all of the
outstanding capital stock of the Company in return for Cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Purchase and Sale of Target Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from each of the Sellers, and each
of the Sellers agrees to sell to the Buyer, all of his or her Company Shares for
the consideration specified below in this Section 1.
(b) Purchase Price. The Buyer agrees to pay to the Sellers, as
consideration for all of the outstanding Company Shares, the Purchase Price (the
"Purchase Price") described in Schedule A to this Agreement, and agrees to make
the escrow deposit ("Escrow Deposit") in the form and manner described in
Schedule A and more particularly in the ▇▇▇▇▇▇▇ money escrow agreement ("▇▇▇▇▇▇▇
Money Escrow Agreement") attached hereto as Exhibit A. The Purchase Price shall
be allocated among the Sellers in proportion to their respective holdings of
Company Shares as set forth in Section 2(e) of the Disclosure Schedule.
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at a mutually agreeable
location, commencing at 9:00 a.m. local time on the date set by the Buyer not
earlier than the fifth business day or later than the tenth business day after
the FCC approval of the Transfer Application becomes a Final Order, by which
date all other conditions to the obligations of the Parties to consummate the
transactions contemplated hereby will
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have been satisfied or waived, or such other date as the Parties may mutually
determine which shall in no event be earlier than December 31, 1997 (the
"Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below, (ii) the Buyer will deliver to the Sellers
the various certificates, instruments, and documents referred to in Section 6(b)
below, (iii) each of the Sellers will deliver to the Buyer stock certificates
representing all of his, her or its Company Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (iv) the Buyer will
deliver to each of the Sellers the consideration specified in Section 1(b)
above.
(e) Noncompetition Agreement. On the Closing Date the Company shall
cause ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to execute a Noncompetition Agreement with the Buyer in
the form attached hereto as Exhibit B, which shall include a covenant not to
compete with the Buyer in the markets served by the Stations. In addition to the
Purchase Price, an amount equal to Five Hundred Thousand and no/100 Dollars
($500,000.00) shall be paid to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as consideration for the
agreements set forth in the Noncompetition Agreement, under the terms and
conditions set forth in that Agreement.
(f) Retainage Agreement. Concurrent with the execution of this
Agreement, the Sellers and Buyer shall execute the Retainage Agreement in the
form attached hereto as Exhibit C, which shall provide for the retention of a
portion of the Purchase Price by the Retainage Agent under the terms and
conditions set forth in that Agreement.
(g) Local Marketing Agreement. Concurrent with the execution of this
Agreement, the Seller and Buyer shall execute the Local Marketing Agreement (the
"Local Marketing Agreement") which includes the terms and conditions pursuant to
which the Buyer will purchase the airtime on the Stations. The accounts
receivable of the Station in existence as of the effective date of the Local
Marketing Agreement shall be collected pursuant to the terms and conditions of
the Local Marketing Agreement.
2. Representations and Warranties of the Sellers. Each of the
Sellers represents and warrants to the Buyer that the statements contained in
this Section 2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 2) with respect to himself, herself or itself, except as
set forth in Disclosure Schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule") corresponding to the lettered and
numbered sections of this Section 2.
(a) Authorization of Transaction. Each Seller has full power and
authority to execute and deliver this Agreement and to perform his or her
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each Seller, enforceable in accordance with its terms and
conditions. No Seller need give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order to
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consummate the transactions contemplated by this Agreement, other than Transfer
Assignment Applications described in Section 5(b).
(b) Noncontravention. Neither the execution and the delivery of this
Agreement, nor (assuming the receipt of all necessary regulatory approvals) the
consummation of the transactions contemplated hereby, or the performance of his
or her obligations hereunder, will (i) violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which any Seller is subject,
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which any Seller is a party or by which he, she or it is bound or
to which any of his, her or its assets is subject.
(c) Brokers' Fees. Other than Eighty Thousand and no/100 Dollars
($80,000.00) (40%) payable by the Sellers to Montcalm Media Brokerage, no Seller
has any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transac tions contemplated by this
Agreement for which the Buyer could become liable or obligated.
(d) Company Shares. Each Seller holds of record and owns
beneficially the number of Company Shares set forth next to his or its name in
Section 2(d) of the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), claims, Taxes, Security Interests, options, warrants, rights,
contracts, calls, commitments, equities, and demands. No Seller is a party to
any option, warrant, right, contract, call, put, or other agreement or
commitment providing for the disposition or acquisition of any capital stock of
the Company (other than this Agreement). No Seller is a party to any voting
trust, proxy, or other agreement or understanding with respect to the voting of
any capital stock of the Company.
3. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Illinois.
(b) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms and conditions.
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(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor (assuming the receipt of all necessary regulatory approvals) the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Section 1 above), will (i) violate any statute,
regulation, rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency, or court to which the
Buyer is subject or any provision of the charter or bylaws of the Buyer or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest, or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
are subject. Other than with respect to the Transfer Application, the Buyer does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(d) Brokers' Fees. Other than One Hundred Twenty Thousand and no/100
Dollars ($120,000.00) payable by the Buyer to Montcalm Media Brokerage, the
Buyer has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Sellers could become liable or obligated.
4. Representations and Warranties Concerning the Company. The
Sellers represent and warrant to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date, except as set forth in the
Disclosure Schedule.
(a) Organization, Qualification, and Corporate Power. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its businesses or the ownership or leasing of its properties
requires such qualification. The Company has full corporate power and authority
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. Section 4(a) of the Disclosure Schedule lists
the directors and officers of the Company. The Sellers have delivered to the
Buyer correct and complete copies of the charter and bylaws of the Company (as
amended to date). The minute books containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books, and the stock record books of the
Company are correct and complete. The Company is not in default under or in
violation of any provision of its charter or bylaws. The Company does not have
any Subsidiaries and does not control directly or indirectly or have any direct
or indirect equity participation in any corporation, partnership, trust, or
other business associ ation which is not a Subsidiary of the Company.
(b) Capitalization. The entire authorized capital stock of the
Company consists of One Million (1,000,000) Company Shares, of which Five
Hundred Sixty Thousand (560,000) Company Shares are issued and outstanding and
Four Hundred Forty-Thousand (440,000) Company Shares are held in treasury. All
of the issued and outstanding Company Shares have been duly
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authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the respective Sellers as set forth in Section 2(d) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights, or other
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition, or acquisition of any
of its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to the Company. There are no
voting trusts, proxies, or any other agreements or understandings with respect
to the voting of the capital stock of the Company.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor (assuming receipt of all necessary regulatory approvals) the
consummation of the transactions contemplated hereby, will (i) violate any
statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency, or court to
which the Company is subject or any provision of the charter or bylaws of the
Company or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Company is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets). Other than with respect to the
Transfer Application, the Company need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Financial Statements. The following financial statements have
been provided to Buyer and are included in Section 4(d) of the Disclosure
Schedules (collectively the "Financial Statements"): (i) audited and/or reviewed
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31, 1993; December 31,
1994; December 31, 1995; and December 31, 1996 (the "Most Recent Fiscal Year
End"), for the Company; and (ii) unaudited statements of income and Cash flow,
as of and for each month during 1996 and 1997 (through September) for the
Company. The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, are
correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete). Without limiting the
generality of the foregoing, all material revenues and expenses of the Company
(A) are properly reflected in the Financial Statements, (B) have arisen in the
Ordinary Course of Business, (C) are valid and subject to no counter-claims, and
(D) will be or has been collected or paid at their recorded amounts subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheets.
(e) Subsequent Events. Since December 1, 1997, except as set forth
in Section 4(e) of the Disclosure Schedule:
(i) the Company has not sold, leased, transferred, or assigned
any of its material assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
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(ii) the Company has not entered into any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course of
Business;
(iii) no party has accelerated, terminated, modified, or
cancelled any contract, lease, sublease, license, or sublicense (or series
of related contracts, leases, subleases, licenses, and sublicenses)
involving more than $5,000 to which the Company is a party or by which it
is bound;
(iv) no Security Interest has been imposed upon any of the
Company's assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) outside the Ordinary Course of
Business;
(vi) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and acquisitions)
outside the Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease obligations)
outside the Ordinary Course of Business;
(viii) the Company has not delayed or postponed (beyond its
normal practice) the payment of accounts payable and other Liabilities;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) the Company has not experienced any action adversely
affecting the FCC Licenses;
(xii) the Company has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business giving rise to any claim or right
on its part against the person or on the part of the person against it;
(xiii) outside the Ordinary Course of Business, the Company
has not terminated or entered into any employment arrangement, employment
contract, consulting
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contract or severance agreement or collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or
agreement;
(xiv) the Company has not granted any increase outside the
Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
(xv) the Company has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E) retirement,
(F) medical, hospitalization, life, or other insurance, (G) severance, or
(H) other plan, contract, or commitment for any of its directors,
officers, and employees, or modified or terminated any existing such plan,
contract, or commitment;
(xvi) outside the Ordinary Course of Business, the Company has
not made any other change in employment terms for any of its directors,
officers, and employees;
(xvii) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xviii) the Company has not materially altered its credit and
collection policies or its accounting policies;
(xix) the Company has not materially altered the programming,
format or call letters of the Stations or their promotional and marketing
activities, nor has the Company terminated or received notice of
termination for any syndicated programming;
(xx) the Company has not applied to the FCC for any
modification of the FCC Licenses or failed to take any action necessary to
preserve the FCC Licenses and has operated the Stations in material
compliance therewith and with all FCC rules and regulations;
(xxi) there has been no change made or authorized in the
charter or bylaws of the Company;
(xxii) the Company has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion or exercise) any
of its capital stock;
(xxiii) the Company has not declared, set aside, or paid any
dividend, distribution, or bonus with respect to its capital stock or
redeemed, purchased, or otherwise acquired any of its capital stock, other
than the December 1997 distribution not to exceed $200,000; and
(xxiv) the Company has not committed to any of the foregoing.
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(f) Undisclosed Liabilities. As of the Closing, the Company has no
undischarged Liability (and there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against any of them giving rise to any Liability), except for (i) Liabilities
set forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) and (ii) Liabilities which have arisen after the Most Recent Fiscal
Year End in the Ordinary Course of Business (none of which relates to any breach
of contract, breach of warranty, tort, infringement, or violation of law or
arose out of any charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand).
(g) Tax Matters.
(i) The Company has filed all Tax Returns and returns that it
was required to file or may be required to file. All such Tax Returns that
were filed were correct and complete in all respects, and all such Tax
Returns that will be filed will be correct and complete in all respects.
All Taxes owed by the Company have been paid. The Company is not currently
a party to a pending Tax audit, aware of a threatened Tax audit, or the
beneficiary of any extension of time within which to file any Tax Return.
No claim has ever been made by an authority in a jurisdiction where the
Company does not file reports and returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any of
the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to
any employee, creditor, independent contractor, or other third party.
(iii) No Seller or director or officer (or employee
responsible for Tax matters) of the Company has Knowledge that any
authority has or will seek to assess any additional Taxes for any period
for which returns have been filed. There is no dispute or claim concerning
any Tax Liability of the Company either (A) claimed or raised by any
authority in writing or (B) as to which the Company and the directors and
officers (and employees responsible for Tax matters) of the Company has
Knowledge based upon personal contact with any agent of such authority.
The Company has provided to Buyer, and Section 4(g) of the Disclosure
Schedule lists, true and correct copies of all federal, state, local, and
foreign income Tax Returns filed with respect to the Company for taxable
periods ended on or after January 1, 1992, and all examination reports,
and statements of deficiencies assessed against or agreed to by the
Company since January 1, 1993. No such return has been the subject of
audit. The Company has delivered to the Buyer correct and complete copies
of all federal income Tax Returns.
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Company is not a party to any Tax allocation or
sharing agreement. The Company has not ever been (or has any Liability for
unpaid Taxes because it once was)
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a member of an Affiliated Group during any part of any consolidated return
year within any part of a consolidated return year.
(vi) Section 4(g) of the Disclosure Schedule sets forth the
following information with respect the Company as of the most recent
practicable date: (A) the basis of the Company in its assets; (B) the
amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution
allocable to the Company; and (C) the amount of any deferred gain or loss
allocable to the Company arising out of any Deferred Intercompany
Transaction.
(vii) The unpaid Taxes of the Company do not exceed the
reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company in
filing its Tax Returns.
(h) Tangible Assets. Section 4(h) of the Disclosure Schedule sets
forth a listing of all transmitter and station equipment, vehicles and other
tangible personal property used in conducting the operation and business of the
Stations. The Company owns or leases all tangible assets necessary for the
conduct of the operation and business of the Stations as presently conducted and
as presently proposed to be conducted. Each such tangible asset is free from
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used.
To the Knowledge of Sellers and the Company, no such tangible asset is in need
of replacement.
(i) Owned Real Property. Section 4(i) of the Disclosure Schedule
lists and describes briefly all real property that the Company owns. With
respect to each such parcel of owned real property:
(i) the Company has good and marketable title to the parcel of
real property, free and clear of any Security Interest, easement,
covenant, or other restriction, (including but not limited to leases or
other agreements granting to any party the right of use or occupancy of
and options or rights of first refusal to purchase) except for recorded
easements, covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto;
(ii) there are no (A) pending or, to the Knowledge of the
Sellers and the Company, threatened condemnation proceedings relating to
the property; (B) pending or, to the Knowledge of the Sellers and the
Company, threatened litigation or administrative actions relating to the
property; or (C) other matters affecting occupancy, or value thereof;
(iii) the legal description for the parcel contained in the
deed thereof describes such parcel fully and adequately, the buildings,
towers, antennae and improvements are located within the boundary lines of
the described parcels of land, are not
-9-
in violation of applicable setback requirements, zoning laws, and
ordinances (and none of the properties or buildings or improvements
thereon are subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not encroach on any
easement which may burden the land, the land does not serve any adjoining
property for any purpose inconsistent with the use of the land, the
property is not subject to any restriction for which any permits or
licenses necessary to the use thereof have not been obtained, and access
to the property is provided by public right-of-way;
(iv) all facilities have received all approvals of
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and regulations;
(v) there are no parties (other than the Seller) in possession
of the parcel of real property, other than tenants under any leases
disclosed in Section 4(j) of the Disclosure Schedule who are in possession
of space to which they are entitled, no leases, subleases or other
agreements granting to any party any right of use or occupancy or option
or right of refusal with respect to any parcel of real property;
(vi) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities, including electricity and telephone, all of which
services are adequate in accordance with all applicable laws, ordinances,
rules, and regulations and are provided via public or private roads or via
permanent, irrevocable, appurtenant easements benefitting the parcel of
real property; and
(vii) each parcel of real property abuts on and has direct
vehicular access to a public road or access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of
real property.
(j) Real Property Leases. Section 4(j) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to the
Company. Section 4(j) of the Disclosure Schedule also identifies the leased or
subleased properties for which title insurance policies are to be procured in
accordance with Section 6(i) below. The Company has delivered to the Buyer
correct and complete copies of the leases and subleases listed in Section 4(j)
of the Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 4(j) of the Disclosure Schedule:
(i) the lease or sublease is and, following the Closing, will
continue to be, legal, valid, binding, enforceable, and in full force and
effect;
(ii) no party to the lease or sublease is in breach or default
(or has repudiated any provision thereof), and no event has occurred
which, with notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration thereunder;
-10-
(iii) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(iv) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (iii) above are true and
correct with respect to the underlying lease;
(v) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
(vi) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses,
permits and zoning approvals) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(vii) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of
said facilities; and
(viii) to the Knowledge of Sellers and the Company, the owner
of the facility leased or subleased has good and marketable title to the
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for recorded easements,
covenants, and other restrictions impair the current use, occupancy, or
value, or the marketability of title, of the property subject thereto.
(k) Intellectual Property. The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder is set forth on Section (k) of the Disclosure Schedule and
each item listed will be owned or available for use by the Buyer on identical
terms and conditions immediately subsequent to the Closing hereunder. To the
Knowledge of Sellers and the Company, the Company has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and the Company has never
received any charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation, or violation. To the knowledge of the Sellers
and the Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of the Company.
(l) Contracts. Other than Advertising Contracts, Section 4(l) of the
Disclosure Schedule lists the contracts, agreements, and other written
arrangements to which the Company is a party and either involving payment in
excess of Five Thousand Dollars ($5,000) per year or not entered into in the
Ordinary Course of Business. The Company has delivered to the Buyer a correct
and complete copy of each written arrangement listed in Section 4(l) of the
Disclosure Schedule (as amended to date). With respect to each written
arrangement so listed:
(i) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect;
-11-
(ii) the written arrangement will continue to be legal, valid,
binding, and enforceable and in full force and effect on identical terms
following the Closing;
(iii) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration, under the
written arrangement; and
(iv) no party has repudiated any provision of the written
arrangement.
The written arrangements listed in Section 4(l) of the Disclosure Schedule are
all of the written arrangements necessary for the conduct of the operation and
business of the Stations as presently conducted and proposed to be conducted.
The Company is not a party to any verbal contract, agreement, or other
arrangement which, if reduced to written form, would be required to be listed in
Section 4(l) of the Disclosure Schedule under the terms of this Section 4(l).
(m) FCC Licenses and Compliance with FCC Requirements.
(i) All licenses, permits, authorizations, franchises,
certificates of compliance, and consents of governmental bodies,
including, without limitation, the FCC Licenses, used or useful in the
operation of the Stations as they are now being operated are detailed in
Section 4(m) of the Disclosure Schedule and are in full force and effect,
are unimpaired by any acts or omissions of any Sellers, the Company or the
Company's employees or agents, and are free and clear of any restrictions
which might limit the full operation of the Stations. Except as set forth
in Section 4(m) of the Disclosure Schedule, no condition exists or event
has occurred that permits, or after notice or lapse of time, or both,
would permit, the revocation or termination of any such license, permit,
consent, franchise, or authorization (other than pursuant to their express
expiration date) or the imposition of any material restriction or
limitation upon the operation of the Stations as now conducted. Except as
set forth in Section 4(m) of the Disclosure Schedule, the Sellers and the
Company are not aware of any reason why the FCC licenses might not be
renewed in the ordinary course or revoked.
(ii) The Stations are each in compliance with the FCC's policy
on exposure to radio frequency radiation. No renewal of any FCC License
would constitute a major environmental action under the FCC's rules or
policies. Access to the Station's transmission facilities is restricted in
accordance with the policies of the FCC.
(iii) Except as set forth in Section 4(m) of the Disclosure
Schedule, to the best of the Knowledge of the Sellers and the Company, the
Company is not the subject of any FCC or other governmental investigation
or any notice of violation or order, or any material complaint, objection,
petition to deny, or opposition issued by or filed with the FCC or any
other governmental authority in connection with the operation of or
authorization for the Stations, and there are no proceedings (other than
rulemaking proceedings of general applicability) before the FCC or any
other governmental authority that could adversely affect
-12-
any of the FCC Licenses or the authorizations listed in Section 4(m) of
the Disclosure Schedule.
(iv) The Company has filed with the FCC and all other
governmental authorities having jurisdiction over the Stations all
material reports, applications, documents, instruments, and other
information required to be filed, and will continue to make such filings
through the Closing Date.
(n) Insurance. Section 4(n) of the Disclosure Schedule sets forth a
complete and accurate description of all of the Company's insurance coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; and (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing Date.
(o) Litigation. Section 4(o) of the Disclosure Schedule sets forth
each instance in which the Company: (i) is subject to any unsatisfied judgement,
order, decree, stipulation, injunction, or charge; or (ii) is a party or, to the
Knowledge of the Sellers and the Company, is threatened to be made a party to
any charge, complaint, action, suit, proceeding, hearing, or investigation of or
in any court or quasijudicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. None of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set forth
in Section 4(o) of the Disclosure Schedule could result in any adverse change in
the assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company or the Stations taken as a whole.
The Sellers and the Company have no Knowledge of any Basis for any such charge,
complaint, action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Company.
(p) Employees. Section 4(p) of the Disclosure Schedule sets forth a
listing of the names, positions, job descriptions, salary or wage rates and all
other forms of compensation paid for work at the Stations of each employee of
Company. To the Knowledge of the Sellers and the Company, no key employee or
group of employees has any plans to terminate employment with the Company. The
Company is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Company has not committed any unfair
labor practice. The Sellers and the Company have no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
(q) Notes and Accounts Receivable. All notes and accounts receivable
of the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are presently current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
-13-
(s) Employee Benefits. Section 4(s) of the Disclosure Schedule lists
all Employee Benefit Plans that the Company maintains or has maintained, or to
which the Company contributes, or has contributed for the benefit of any current
or former employee of the Company. Each Employee Benefit Plan so listed is an
Employee Welfare Benefit Plan and none is an Employee Pension Benefit Plan.
(i) Each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation in all respects with
the applicable requirements of ERISA and the Code.
(ii) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to
each Employee Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980(B) have been met with respect to
each Employee Welfare Benefit Plan. All premiums or other payments for all
periods have been paid with respect to each Employee Welfare Benefit Plan
that is a group health plan within the meaning of the Code Sec.
4980(B)(g)(2) and Section 607 of ERISA.
(iii) There have been no Prohibited Transactions with respect
to any Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any Employee Benefit
Plan.
(iv) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of any of the Sellers
and the Company, threatened. None of the Sellers and the Company has any
Knowledge of any Basis for any such charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand.
(v) The Company has delivered to the Buyer correct and
complete copies of (A) the plan documents and summary plan descriptions,
(B) the most recent determination letter received from the Internal
Revenue Service, (C) the most recent Form 5500 Annual Report, and (D) all
related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan.
The Company does not contribute to, has never contributed to, or has never been
required to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan. The Company has not
incurred, and neither the Sellers nor the Company has any reason to expect that
the Company will incur any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any Employee Pension Benefit Plan
that the Company maintains or ever has maintained or to which it contributes,
ever has contributed, or ever has been required to
-14-
contribute. The Company does not maintain and has not maintained or contributed,
or been required to contribute to any Employee Pension Benefit Plan or Employee
Welfare Benefit Plan providing health, accident, or life insurance benefits to
former employees, their spouses, or their dependents (other than in accordance
with Code Sec. 4980(B)).
(t) Environment, Health, and Safety.
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof) concerning the environment,
public health and safety, and employee health and safety, and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against the Company alleging
any failure to comply with any such law or regulation.
(ii) The Company has no Liability (and there is no Basis
related to the past or present operations, and its respective predecessors
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Sellers giving rise
to any Liability) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Federal Water Pollution Control Act of 1972, the
Clean Air Act of 1970, the Safe Drinking Water Act of 1974, the Toxic
Substances Control Act of 1976, the Refuse Act of 1899, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any
other law (or rule or regulation thereunder) of any federal, state, local,
or foreign government (or agency thereof, concerning release or threatened
release of hazardous substances, public health and safety, or pollution or
protection of the environment, or for damage to any site, location, or
body of water (surface or subsurface) or for illness or personal injury.
(iii) The Company has no Liability (and there is no Basis for
any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Sellers giving rise
to any Liability) under the Occupational Safety and Health Act, as
amended, or any other law (or rule or regulation thereunder) of any
federal, state, local, or foreign government (or agency thereof)
concerning employee health and safety, or for any illness of or personal
injury to any employee.
(iv) The Company has obtained and has been in material
compliance with all of the terms and conditions of all permits, licenses,
and other authorizations which are required under, and has complied in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, local, and foreign
laws (including rules, regulations, codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to
public health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or wastes into
ambient air, surface water, ground water, or lands or otherwise
-15-
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
(v) All properties and equipment used in the business of the
Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(vi) To the Knowledge of Sellers and the Company, no
pollutant, contaminant, or chemical, industrial, hazardous, or toxic
material or waste ever has been buried, stored, spilled, leaked,
discharged, emitted, or released on any real property that the Company
owns or ever has owned or leases or ever has leased. The Sellers have
delivered to the Buyer a complete copy of all environmental claims,
reports, studies, compliance actions or the like of the Company which are
available to the Sellers or the Company with respect to any of the Real
Estate.
(u) Legal Compliance.
(i) The Company has complied in all material respects with all
laws (including rules and regulations thereunder) of federal, state, and
local governments (and all agencies thereof), and to the Knowledge of the
Sellers and the Company, no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or
commenced against the Company alleging any failure to comply with any such
law or regulation, including those relating to the employment of labor,
employee civil rights, and equal employment opportunities and relating to
antitrust matters.
(ii) The Company has filed in a timely manner all reports,
documents, and other materials it was required to file (and the
information contained therein was correct and complete in all material
respects) under all applicable laws (including rules and regulations
thereunder). The Company has possession of all records and documents it
was required to retain under all applicable laws (including rules and
regulations thereunder).
(v) Certain Business Relationships With the Company and Its
Subsidiaries. Except as described in Section 4(v) of the Disclosure Schedule,
none of the Sellers and their Affiliates has been involved in any business
arrangement or relationship with the Company within the past twelve (12) months,
and none of the Sellers and their Affiliates owns any property or right,
tangible or intangible, which is used in the business of the Company.
(w) Brokers' Fees. Except as provided in Section 2(d) and Section
3(d) above, the Company has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(x) Advertising Contracts. Section 4(x) of the Disclosure Schedule
lists those Advertising Contracts covering the twelve-month period ending
November 30, 1997, as shown by a report of the Company's accounts receivable as
of that date. Other than to employees of the
-16-
Company or as disclosed in Section 4(x) of the Disclosure Schedule, no
commission or other form of renumeration is paid by the Company with respect to
Advertising Contracts. No party to any Advertising Contract has indicated to the
Company within the past year that it will stop or decrease the rate of
advertising.
(y) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set for in Section 6 below).
(b) Transfer Application. Within ten (10) business days after the
execution of this Agreement, the Company and the Buyer shall jointly file with
the FCC an application for transfer or control of the Company, including its FCC
Licenses, permits and authorizations pertaining to the Stations from the Sellers
to the Buyer (the "Transfer Application"). The costs of the FCC filing fees in
connection with the Transfer Application shall be divided equally between the
Sellers and the Buyer. Each Party shall pay their own attorneys' fees. The
Sellers, the Company and the Buyer shall thereafter prosecute the Transfer
Application with all reasonable diligence and otherwise use their commercially
reasonable efforts to obtain the grant of the Transfer Application as
expeditiously as practicable (but neither the Sellers nor the Buyer shall have
any obligation to satisfy complainants or the FCC by taking any steps which
would have material adverse effect upon the Buyer, the Sellers, or the
Stations). If the FCC imposes any condition on any Party to the Transfer
Application, such Party shall use commercially reasonable efforts to comply with
such condition; provided that no such Party shall be required hereunder to
comply with any condition that would have a material adverse effect upon the
Buyer, the Sellers or the Stations. The Sellers and the Buyer shall jointly
oppose any requests for reconsideration or judicial review of FCC approval of
the Transfer Application and shall jointly request from the FCC an extension of
the effective period of FCC approval of the Transfer Application if the Closing
shall not have occurred prior to the expiration of the original effective period
of the FCC Consent. Nothing in this Section 5(b) shall be construed to limit any
Party's right to terminate this Agreement pursuant to Section 10 of this
Agreement.
(c) Notices and Consents. The Sellers will give any notices to third
parties, and the Sellers will cause the Company to use its commercially
reasonable efforts to obtain any third party consents, that the Buyer reasonably
may request in connection with the matters pertaining to the Company or the
Sellers disclosed or required to be disclosed in the Disclosure Schedule. Each
of the Parties will file any notification and report forms and related material
that he, she or it may be required to file Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, will use his, her or its best efforts to obtain an early
termination of the applicable waiting period, and will make further filings
pursuant thereto
-17-
that may be necessary, proper or advisable. Each of the Parties will take any
additional action that may be necessary, proper, or advisable in connection with
any other notices to, filings with, and authorizations, consents, and approvals
of governments, governmental agencies, and third parties that it may be required
to give, make, or obtain.
(d) Operation of Business. The Sellers will not cause or permit the
Company to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Sellers will not (and will
not direct the Company to) engage in any practice, take any action, embark on
any course of inaction, or enter into any transaction of the sort described in
Section 4(e) above.
(e) Employees. Upon notice to the Sellers, and at mutually agreeable
times, the Company will permit the Buyer to meet with the Company's employees
prior to the Closing Date. Neither the Sellers nor the Company will take any
action to preclude or discourage any of the Company's employees from continuing
employment with the Company.
(f) Advertising Obligations. The Company shall satisfy its air time
obligations under its Advertising Contracts for goods or services ("Barter
Agreements") such that the outstanding aggregate balance owing under all Barter
Agreements as of the Closing Date (taking into account both trade receivables
and trade payables) shall not exceed Five Thousand Dollars ($5,000) worth of air
time. On the Closing Date, the Sellers shall deliver to the Buyer a schedule,
certified by an officer of the Company, reflecting the aggregate outstanding
balances under all Barter Agreements in existence as of the Closing Date.
(g) Operating Statements. The Sellers shall deliver to the Buyer,
for the Buyer's informational purposes only, monthly unaudited statements of
operating revenues and operating expenses of the Stations with ten (10) days
after each such statement is prepared by or for the Company or the Sellers;
provided, however, that this requirement shall not be in effect during the
period that the Local Marketing Agreement is in effect.
(h) Contracts. The Company will not without the prior written
consent of the Buyer amend, change, or modify any of the contracts listed on
Section 2(1) of the Disclosure Schedule in any material respect. The Company
will not without prior written consent of the Buyer enter into any new contracts
respecting the Stations or their properties, except (i) Advertising Contracts
which comply with the representations and warranties pertaining to such
contracts set forth in Section 2(1) above; (ii) contracts entered into in the
Ordinary Course of Business which are cancelable on not more than thirty (30)
days' notice without penalty or premium; (iii) contracts entered into in the
Ordinary Course of Business each of which does not involve more than Ten
Thousand Dollars ($10,000) or all of which do not involve more than Fifty
Thousand Dollars ($50,000) in the aggregate.
(i) Operation of Stations. The Company shall operate the Stations in
material compliance with the FCC Licenses and the rules and regulations of the
FCC, and the FCC Licenses shall at all times remain in full force and effect.
The Company shall file with the FCC all material
-18-
reports, applications, documents, instruments and other information required to
be filed in connection with the operation of the Stations.
(j) Credit and Receivables. The Company will follow its usual and
customary policies with respect to extending credit for Advertising Contracts
and with respect to collecting accounts receivable arising from such extension
of credit.
(k) Preservation of Business. The Sellers will use best efforts to
cause the Company to keep its business and properties substantially intact,
including its present operations, physical facilities, working conditions,
relationships with lessors, licensers, advertisers, suppliers, customers, and
employees, all of the confidential information and trade secrets of the
Stations, and the FCC Licenses.
(l) Full Access and Consultation. The Sellers will permit and will
cause the Company to permit representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Stations, to all premises, properties, books,
records, contracts, Tax records, and documents of or pertaining to the Company
for the purpose, among other things, to review financial statements of the
Company, to verify the accuracy of representations and warranties of the Sellers
and the Company contained in this Agreement, and to prepare for the consummation
of the transactions contemplated by this Agreement. The Sellers will cause the
Company to consult with the Buyer's management with a view to informing the
Buyer's management as to the operations, management and business of the
Stations.
(m) Notice of Developments. The Sellers will give prompt written
notice to the Buyer of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company. Each Party will give prompt written notice
to the other of any material development affecting the ability of the Parties to
consummate the transactions contemplated by this Agreement. No disclosure by any
Party pursuant to this Section 5(g), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(n) Exclusivity. The Sellers will not (and the Sellers will not
cause or permit the Company to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to any (A)
liquidation, dissolution, or recapitalization, (B) merger or consolidation, (C)
acquisition or purchase of securities or assets, or (D) similar transaction or
business combination involving any of the Sellers; or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect to,
assist or participate in, or facilitate in any other manner any effort or
attempt by any person to do or seek any of the foregoing. The Sellers will
notify the Buyer immediately if any person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(o) Title Insurance. To the extent required by Buyer's lender, the
Sellers will reasonably cooperate with the Buyer in obtaining with respect to
each parcel of real estate that the Company owns, leases or subleases an owner's
or leasehold owner's policy (as appropriate) issued
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by a title insurer reasonably satisfactory to the Buyer, in an amount equal to
the fair market value of such real property (including all improvements located
thereon), insuring title to such real property in the Buyer as of the Closing
subject only to the title exceptions which do not impair the current use,
occupancy or value or the marketability of title of the property and are
disclosed in Section 4(i) or Section 4(j) of the Disclosure Schedule, together
with such endorsements for zoning, contiguity, public access and extended
coverage and such other endorsements as the Buyer reasonably requests. The
Sellers shall pay the cost of such title policies.
(p) Surveys. To the extent required by Buyer's lender, with respect
to each parcel of real property that the Company owns, leases, or subleases, and
as to which a title insurance policy is to be procured pursuant to Section 5(o)
above, the Sellers will reasonably cooperate with the Buyer in the procurement
in preparation for the Closing a current survey of the real property certified
to the Buyer, prepared by a licensed surveyor and conforming to current expanded
ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the location
of all improvements, easements, party walls, sidewalks, roadways, utility lines,
and other matters shown customarily on such surveys, and showing access
affirmatively to public streets and roads (the "Survey"). The Survey shall not
disclose any survey defect or encroachment from or onto the real property which
has not been cured or insured over prior to the Closing. The Buyer shall pay the
costs of such Surveys.
(q) Environmental Assessments. The Sellers will assist the Buyer in
obtaining with respect to each parcel of real estate that the Company owns,
leases or subleases and as to which a title insurance policy is to be procured
pursuant to Section 5(o) above, a current Phase I environmental site assessment
from an environmental consultant or engineer reasonably satisfactory to the
Buyer which shall not disclose or recommend any action with respect to any
condition to be remediated or investigated or any contamination on the site
assessed. The Buyer shall pay the cost of such environmental site assessment.
(r) Control of Stations. The transactions contemplated by this
Agreement shall not be consummated until after the FCC has given its consent and
approval to the Transfer Application. Between the date of this Agreement and the
Closing Date, the Buyer and its employees or agents shall not directly or
indirectly control, supervise, or direct, or attempt to control, supervise, or
direct, the operation of the Stations, and such operation shall be the sole
responsibility of and in the control of the Company.
(s) Risk of Loss. The risk of loss, damage, or destruction to any of
the assets of the Company shall remain with the Sellers until the Closing. In
the event of any such loss, damage, or destruction the Sellers will promptly
notify the Buyer of all particulars thereof, stating the cause thereof (if
known) and the extent to which the cost of restoration, replacement and repair
of the assets lost, damaged or destroyed will be reimbursed under any insurance
policy with respect thereto. The Sellers will repair or replace such assets as
soon as possible after loss, damage or destruction thereof and shall use its
best efforts to restore as promptly as possible transmissions as authorized in
the FCC Licenses. The Closing Date shall be extended (with FCC consent, if
necessary) for up to sixty (60) days to permit such repair or replacement. If
repair or replacement cannot be accomplished within sixty (60) days of the date
of the Sellers' notice to the Buyer, and the Buyer
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determines that the Sellers' failure to repair or replace, alone or in the
aggregate, would have a material adverse effect on the operation of the
Stations:
(i) the Buyer may elect to terminate this Agreement; or
(ii) the Buyer may postpone the Closing Date until such time
as the property has been repaired, replaced or restored in a manner and to
an extent reasonably satisfactory to the Buyer, unless the same cannot be
reasonably effected within ninety (90) days of the date of the Sellers'
notice to the Buyer, in which case either Party may terminate this
Agreement; or
(iii) the Buyer may choose to accept the lost, damaged or
destroyed assets in their "then" condition, together with the Seller's
assignment to the Buyer all rights under any insurance claims covering the
loss, damage or destruction and payment over to the Buyer any proceeds
under any such insurance policies, previously received by the Sellers with
respect thereto.
In the event the Closing Date is postponed pursuant to this Section 5(s),
the parties hereto will cooperate to extend the time during which this Agreement
must be closed as specified in the consent of the FCC.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 2
and Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) the Sellers and the Company shall have procured all of
the third party consents specified in Section 5(c) above, all of the title
insurance commitments, and endorsements specified in Section 5(o) above,
and all of the surveys specified in Section 5(p) above; and Sellers shall
have assisted the Buyer in obtaining all the Phase I environmental site
assessments described in Section 5(q) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (C) affect adversely
the right of the Buyer to own,
-21-
operate, or control the Company Shares, the Company or the Stations (and
no such judgment, order, decree, stipulation, injunction, or charge shall
be in effect);
(v) the Sellers shall have delivered to the Buyer a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Section 6(a)(i)-(iv) is satisfied in all respects;
(vi) the Transfer Applications shall have been approved by a
Final Order of the FCC and the Buyer shall have received all governmental
approvals required to transfer all other authorizations, consents, and
approvals of governments and governmental agencies set forth in the
Disclosure Schedule;
(vii) the Buyer shall have received from counsel to the
Sellers an opinion with respect to the matters set forth in Exhibit D
attached hereto, addressed to the Buyer and dated as of the Closing Date;
(viii) the relevant parties shall have entered into the
Postclosing Agreement;
(ix) the officers and directors of the Company shall have
tendered written confirmation of their resignation of service by and for
the Company and repaid or satisfied all Liabilities to the Company and all
shall have released the Company of all Liabilities;
(x) the Sellers and the Company shall have paid or obtained
the release of all Liabilities of the Company existing at the Closing Date
including, but not limited to, indebtedness for borrowed money and trade
accounts payable and all Liabilities to the Sellers, but excluding
obligations not yet due and payable under long-term leases and contracts
identified in Section 4(l) of the Disclosure Schedule; and
(xi) all actions in consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
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(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasijudicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in
Section 5(b)(i)-(iii) is satisfied in all respects;
(v) each of the Transfer Applications shall have been approved
by a Final Order of the FCC and the Buyer shall have received all
governmental approvals required to transfer all other authorizations,
consents, and approvals of governments and governmental agencies set forth
in the Disclosure Schedule; and
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Sellers.
The Sellers may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Post-Closing Covenants. The Parties agree as follows with respect
to the period following the Closing:
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below). At Sellers' request, Buyer shall provide Sellers with
reasonable access to such books and records of the Company as Sellers may
reasonably require to comply with their tax reporting and filing obligations.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investiga tion, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with the
contesting or defending Party and its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to its
books and records as shall be necessary in connection with the contest or
defense, all at the sole cost
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and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 8 below).
(c) Transition. None of the Sellers will take any action that
primarily is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of any of the Stations
or the Company from maintaining the same business relationships with the
Stations or the Company after the Closing as it maintained with the Stations or
the Company prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the business of any of the Stations to the Buyer from and
after the Closing. No Seller and no Affiliate of any Seller will employ or offer
to employ any employee of the Company in the Odessa-Midland, Texas metropolitan
area for a period of two (2) years after the Closing Date, unless such employee
has been terminated by Buyer.
(d) Confidentiality. Each of the Sellers will treat and hold as
confidential such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential Information
which are in his or its possession. In the event that any of the Sellers is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Company will
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this Section 6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Company may disclose the Confidential Information to the
tribunal; provided, however, that the disclosing Company shall use his or its
best efforts to obtain, at the request of the Buyer, an order or other assurance
that confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
(e) Retainage Adjustment. In the event and to the extent that the
Buyer or the Company may become obligated to pay after the Closing any Liability
of the Company that accrued prior to the Closing, such amount shall be deducted
from the Retainage Deposit pursuant to the terms of the Retainage Agreement.
8. Remedies for Breaches of this Agreement.
(a) Survival. All of the representations and warranties of the
Sellers and the Company contained in Section 4 of this Agreement (other than the
representations and warranties of the Sellers and the Company contained in
Sections 4(a), 4(b), 4(c), 4(g) and 4(x) hereof) shall survive the Closing (even
if the Buyer knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect for the
period of the applicable statute of limitations plus ninety (90) days with
respect to any claim by the Buyer based on a claim or action by a third party
and for a period of two (2) years following Closing with respect
-24-
to any claim by the Buyer not based on a claim or action by a third party. All
of the other representa tions, warranties, and covenants of the Buyer and the
Sellers contained in this Agreement (including the representations and
warranties of the Sellers contained in Sections 2 and of the Company contained
in Sections 4(a), 4(b), 4(c) and 4(g) hereof) shall survive the Closing (even if
the damaged Party knew or had reason to know of any misrepresentation or breach
of warranty or covenant at the time of Closing) and continue in full force and
effect forever thereafter.
(b) Indemnification Provisions for the Benefit of the Buyer. Each of
the Sellers agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by (i) any breach of any of the
Seller's representations, warranties, and covenants contained in this Agreement
(so long as the particular representation, warranty, or covenant survives the
Closing and the Buyer makes a written claim for indemnification within the
applicable survival period); or (ii) any Liability of the Company existing as of
the Closing; provided, however, that this Section 8(b) shall not apply if Buyer
seeks and obtains specific performance under Section 8(e) below or liquidated
damages under Section 8(f) below.
(c) Indemnification Provisions for the Benefit of the Sellers. The
Buyer agrees to indemnify the Sellers from and against the entirety of any
Adverse Consequences the Sellers may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any of the Buyer's
representations, warranties, and covenants contained in this Agreement (so long
as the particular representation, warranty, or covenant survives the Closing and
the Sellers make a written claim for indemnification within the applicable
survival period).
(d) Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any liability or obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is damaged. In the
event any Indemnifying Party notifies the Indemnified Party within fifteen (15)
days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, (i) the Indemnifying Party
will defend the Indemnified Party against the matter with counsel of its choice
reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may
retain separate co-counsel at its sole cost and expense (except that the
Indemnifying Party will be responsible for the fees and expenses of the separate
co-counsel to the extent the Indemnified Party concludes reasonably that the
counsel the Indemnifying Party has selected has a conflict of interest), (iii)
the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the matter without the written consent of
the Indemnifying Party (not to be withheld unreasonably), and (iv) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all Liability with respect thereto, without the written consent of the
Indemnified Party (not to be withheld unreasonably). In the event the
Indemnifying Party does not notify the Indemni fied Party within 15 days after
the Indemnified Party has given notice of the matter that the
-25-
Indemnifying Party is assuming the defense thereof, however, the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate.
(e) Specific Performance. Each of the Parties acknowledges and
agrees that the Buyer would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the Buyer shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 11(p) below), in addition
to any other remedy to which it may be entitled, at law or in equity. Each of
the Parties acknowledges and agrees that notwithstanding the provision in
Section 8(f) with respect to the payment of the transaction fee upon a breach of
a covenant of this Agreement prior to the Closing, money damages would not be an
adequate remedy for a breach of any provision of this Agreement.
(f) Liquidated Damages. The Buyer and the Sellers acknowledge that
in the event that the transactions contemplated by this Agreement are not closed
because of a default by the Sellers, the Adverse Consequences as a result of
such default may be difficult, if not impossible, to ascertain. Accordingly, in
the event the transactions contemplated by this Agreement are not consummated
due to a default of this Agreement by the Sellers, then the Buyer shall be
entitled to receive from the Sellers for such default, the sum of One Hundred
Thousand and no/100 Dollars ($100,000.00) as transaction fee without the need
for proof of damages; provided, however, that the Buyer shall retain the option
to seek, pursuant to Section 8(e), and recover in lieu of the transaction fee
described in this Section 8(f), the remedy of specific performance. In the event
that the transactions contemplated by this Agreement are not consummated due to
a default of this Agreement by the Buyer, then the Sellers shall be entitled to
recover from the Buyer for such default, Seven Hundred Fifty Thousand and no/100
Dollars ($750,000.00). Sellers shall pursue the ▇▇▇▇▇▇▇ Money Escrow Deposit
under the terms of the ▇▇▇▇▇▇▇ Money Escrow Agreement as the sole means of
satisfaction of these liquidated damages. The Buyer and Sellers agree to pay
said liquidated damages within ten (10) days of the date that the other Party
obtains final and nonappealable judgment for the same.
(g) Other Indemnification Provisions. The remedies provided in
Sections 8(e) and 8(f) shall be exclusive remedies of the Parties prior to the
Closing for any breach of representation, warranty or covenant. The Buyer shall
have the right to recoup from any amount due to the Sellers any amount due from
the Sellers under this Section 8.
9. Definitions.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
-26-
"Adjusted Accounts Receivable" means the Company's accounts receivable on
the effective date of the Local Marketing Agreement, less any trade payables or
other liabilities not otherwise satisfied by the Company, less amounts which
have not been collected by Buyer despite commercially reasonable efforts as of
the earlier of (i) the Closing Date, or (ii) a date 120 days after the effective
date of the Time Brokerage Agreement.
"Advertising Contract" means any arrangement with any third party under
which the Seller has created, incurred, assumed or guaranteed an obligation to
provide advertising or air time on the Station.
"Affiliate" means with reference to any person or entity, another person
or entity controlled by, under the control of or under common control with that
person or entity.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents determined in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 1(c) above.
"Closing Date" has the meaning set forth in Section 1(c) above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the Preface above.
"Company Share" means any share of the Common Stock of the Company.
"Confidential Information" means any information concerning the businesses
and affairs of the Company.
"Disclosure Schedule" has the meaning set forth in Section 2 above.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Agreement.
-27-
"▇▇▇▇▇▇▇ Money Deposit" has the meaning set forth in Section 1(b) above.
"▇▇▇▇▇▇▇ Money Escrow Agent" means Bank One Arizona.
"▇▇▇▇▇▇▇ Money Escrow Agreement" has the meaning set forth in Section 1(b)
above.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Entity" means a corporation, limited liability company, partnership,
limited partnership, limited liability partnership or other entity recognized by
any jurisdiction within the United States.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FCC" means the Federal Communications Commission of the United States.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Final Order" means an action by the FCC as to which: (a) no request for
stay by the FCC is pending, no such stay is in effect, and any deadline for
filing a request for any such stay has passed; (b) no appeal, petition for
rehearing or reconsideration, or application for review is pending before the
FCC and the deadline for filing any such appeal, petition or application has
passed; (c) the FCC has not initiated reconsideration or review on its own
motion and the time in which such reconsideration or review is permitted has
passed; and (d) no appeal to a court, or request for stay by a court, of the
FCC's action is pending or in effect, and the deadline for filing any such
appeal or request has passed.
"Financial Statements" has the meaning set forth in Section 4(d) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) above.
-28-
"Indemnifying Party" has the meaning set forth in Section 8(d) above.
"Intellectual Property" means all (a) patents, patent applications, patent
disclosures, and improvements thereto, (b) trademarks, service marks, trade
dress, call letters, logos, trade names, and corporate names and registrations
and applications for registration thereof, (c) all programs, programming
materials, copyrights and registrations and applications for registration
thereof, (d) mask works and registrations and applications for registration
thereof, (e) computer software, data, and documentation, (f) trade secrets and
confidential business information (including formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
market and other research information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information), (g) other proprietary rights, and
(b) copies and tangible embodiments thereof (in whatever form or medium).
"Joint and Several" has the meaning set forth in Section 10(o) below.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for Taxes.
"Licenses" means all FCC and other governmental licenses, franchises,
approvals, certificates, authorizations and rights of the Sellers and the
Company with respect to the operations of the Stations and all applications
therefor, together with any renewals, extension or modifications thereof and
additions thereto.
"Local Marketing Agreement" has the meaning set forth in Section 1(f)
above.
"Most Recent Balance Sheet" means the balance sheet of the Company as of
the Most Recent Fiscal Year End.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(d)
above.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Process Agent" has the meaning set forth in Section 11(p) below.
-29-
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 1(b) above.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Requisite Sellers" means holders of a majority of the Company Shares.
"Retainage Deposit" has the meaning set forth in Section 1(b) above.
"Retainage Agent" means Bank One Arizona.
"Retainage Agreement" has the meaning set forth in Section 1 above.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) liens for Taxes not yet due
and payable; (b) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation; and (c) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Stations" means the radio broadcast stations having the call letters
KBAT-FM (licensed to Midland, Texas); KMND-AM (licensed to Midland, Texas);
KODM-FM (licensed to Odessa, Texas); KNFM-FM (licensed to Midland, Texas); and
KGEE-FM (licensed to Monahans, Texas).
"Subsidiary" means any corporation with respect to which another specified
corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"Survey" has the meaning set forth in Section 5(j) above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
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"Transfer Application" has the meaning set forth in Section 5(b) above.
"Working Capital" means the current assets (net of reserves) less the
current Liabilities determined in accordance with GAAP.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Sellers may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing in the event the
Sellers are in breach, and the Sellers may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing in the
event the Buyer is in breach, of any material representation, warranty, or
covenant contained in this Agreement in any material respect in each case
if such breach remains uncured for twenty (20) days after notice of breach
is received from the other party;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing if the Closing
shall not have occurred on or before the 270th day following the date of
this Agreement by reason of the failure of any condition precedent under
Section 7(a) hereof (unless the failure results primarily from the Buyer
breaching any representation, warranty, or covenant contained in this
Agreement);
(iv) the Sellers may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing if the
Closing shall not have occurred on or before the 270th day following the
date of this Agreement by reason of the failure of any condition precedent
under Section 7(b) hereof (unless the failure results primarily from the
Sellers breaching any representation, warranty, or covenant contained in
this Agreement); or
(v) the Buyer or the Sellers may terminate this Agreement if
any Transfer Application is denied by Final Order.
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach).
11. Miscellaneous.
(a) Survival. All of the representations, warranties, and covenants
of the Parties contained in this Agreement shall survive the Closing hereunder
as and to the extent provided in Section 8(a).
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(b) Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case, except as to public notices
required by FCC rules, the disclosing Party will advise the other Party prior to
making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(d) Section 338 Election. In the event that Buyer seeks to make an
election to treat the acquisition of Company Shares under this Agreement as an
asset purchase under Section 338 of the Code, Buyer and Sellers agree to
negotiate in good faith mutually acceptable terms for such an election, which
shall include no tax liability to the Sellers.
(e) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, that may have related in any way to the
subject matter hereof.
(f) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party, provided that the Buyer may assign all right, title
and interest in, to and under this Agreement to one or more Affiliates of Buyer.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(h) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Tr.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Copy to: Wiley, Rein & Fielding
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Buyer: Cumulus Holdings, Inc.
Cumulus Broadcasting, Inc.
c/o QUAESTUS Management Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Copy to: Cumulus Broadcasting, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Suite 250
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South Bend, IN 46601
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(j) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Texas.
(k) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Requisite Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(l) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
(m) Expenses. The Buyer and the Sellers, will each bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby, other than as set
forth in Section 5(b) with regard to the Transfer Application. The Sellers will
pay all income taxes, transfer taxes and other recording or similar fees
necessary to vest title to the Company Shares in the Buyer. The Sellers agree
that the Company has not borne or will bear any of the Sellers' costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(n) Construction. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
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requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(o) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(p) The Sellers. When the Sellers make a representation, warranty,
or covenant herein, then that representation, warranty, or covenant will be
referred to herein as the "Joint and Several" obligation of the Sellers. This
means that each Seller will be responsible for the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any breach thereof.
(q) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Odessa/Midland, Texas in
any action or proceeding arising out of or relating to this Agreement, agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on the other Party by sending or delivering a copy of the process
(i) to the Party to be served at the address and in the manner provided for the
giving of notices in Section 10(h) above. Nothing in this Section 10(p),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
CUMULUS HOLDINGS, INC.
By:
-----------------------------
Title:
---------------------------
"Buyer"
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"Sellers"
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SCHEDULE A
Purchase Price. The Buyer agrees to pay to the Sellers the Purchase Price
(the "Purchase Price") payable as follows:
(i) on the date of this Agreement, the Buyer will deposit with
the ▇▇▇▇▇▇▇ Money Escrow Agent the amount of Seven Hundred Fifty Thousand
Dollars and no/100 Dollars ($750,000.00) (the "▇▇▇▇▇▇▇ Money Deposit") in
the form of an irrevocable letter of credit of NationsBank in favor of the
Escrow Agent, in the form attached as Exhibit A-1;
(ii) on the Closing Date, the Buyer shall deposit with the
Retainage Agent the amount of Five Hundred Thousand and no/100 Dollars
($500,000.00) (the "Retainage Deposit") in Cash by wire transfer or
delivery of other immediately available funds, which shall be placed in an
interest-bearing account and shall be released in full to Sellers on the
first anniversary of the Closing Date if Buyer has submitted no notice of
a claim for indemnification under Section 8 of this Agreement; and
(iii) on the Closing Date, the Buyer shall pay to the Sellers
the amount of Thirteen Million and no/100 Dollars ($13,000,000.00), less
an amount equal to the total of the Company's long-term debt and other
liabilities except the lease obligations described in Section 4(j) of the
Disclosure Schedule; and
(iv) on the Closing Date, the Buyer shall pay to the Sellers
an amount equal to the Company's Cash at Closing plus the Adjusted
Accounts Receivable, with prorated adjustments as customary for the
Company's prepaid expenses and deposits.
The ▇▇▇▇▇▇▇ Money Deposit referenced in this Section 1(i) shall be placed in
escrow with the ▇▇▇▇▇▇▇ Money Escrow Agent pursuant to an escrow agreement in
the form attached hereto as Exhibit A (the "▇▇▇▇▇▇▇ Money Escrow Agreement").
Under the terms and conditions of that Agreement, if the Closing does not take
place because the Buyer has breached this Agreement, the letter of credit shall
be paid to the Sellers, and if the Closing does not occur because the Sellers
have breached this Agreement, the letter of credit shall be cancelled and
returned to the issuer.
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LIST OF OMITTED SCHEDULES AND/OR EXHIBITS:
Ex. A - Form of ▇▇▇▇▇▇▇ Money Escrow Agreement
Ex. A-1 - Form of Letter of Credit
Ex. B - Form of Noncompetition Agreement
Ex. C - Form of Retainage Agreement
Ex. D - Form of Opinion of Counsel to the Seller
Disclosure Schedules
The preceding schedules and/or exhibits have been omitted from this exhibit.
The Company agrees to provide copies of such schedules and/or exhibits to the
Commission upon request.
38